Looking to navigate a challenging economy and maintain your competitive edge? Gathering customer feedback and implementing the tips provided in this article can help you retain your existing customers and attract new ones.
The 2010 decade was an unparalleled prosperity for SaaS companies, with many carving out new market niches and witnessing triple-digit growth rates yearly.
According to a report by McKinsey & Company, the SaaS industry grew nearly five times faster than the overall software market during this period. The growth story continued even during the pandemic, as VentureBeat mentions that the revenue for B2B SaaS companies more than tripled over the last two years.
The scenario in 2023?
Lack of funding, new sales struggling to keep up, churn rates going up, customers opting for downgrades, and companies failing to meet their targets!
All this is leading to companies losing revenue along with customers, particularly amplified by the looming global recession. The decline in SaaS industry growth can be understood by the words of Kevin Stoll, VP of Capgemini Invent North America when he mentions that “the SaaS industry drew down by 53% from Q3 of 2021 to Q1 of 2022.”
With customer preferences shifting rapidly in the current economic climate, it becomes more important than ever for companies to listen to their customer’s needs and ensure maximum customer satisfaction.
This is where collecting feedback becomes essential!
Fuel Business Growth with Customer Feedback 🔥
Collect real-time, in-moment feedback at all touchpoints in customer journey and leverage feedback insights to transform customer experience.
By gathering customer insights, companies can gain a competitive edge, improve their offerings, and retain and expand their customer base. Let us dive deep into the importance of collecting feedback in a bad economy and understand how it can be leveraged to scale up your business.
Table of Contents
- Why Collecting Feedback is Important During Recession?
- Tips to Collect Effective Customer Feedback in a Bad Economy
Why Collecting Feedback is Important During a Recession?
In Bloomberg’s 2022 survey, economists have reported a 70% chance of recession hitting in 2023. However, the good news is that you still have time to rethink your business strategies to survive and thrive in tough times.
While some companies may view cost-cutting as the only solution during an economic downturn, investing wisely in areas that benefit the customer experience can be a more effective approach. This includes knowledge management, business process improvement, web support portals, and customer support.
Through customer feedback, you can understand the areas that need special attention and spend money exactly there without breaking the bank. Let us look at the top reasons why collecting feedback is essential in a struggling economy.
1. Get Insights into Changing Customer Needs & Preferences
Whether the economy is steady or alarming, your customers always look for the best value for the money. To understand shifting needs, customer feedback can help reveal any changes in expectations or product quality standards that may have shifted due to financial constraints. This can help you to adapt your product and services to satisfy customers in a crashing economy.
For example, if customers are more concerned with safety and hygiene during a recession, you can prioritize it in product development and marketing.
Invest in a Customer Feedback Software
In a challenging economy, retaining existing customers is more critical than ever. One effective way to accomplish this is by utilizing feedback management tool to gain insights into customer preferences and manage data effectively.
By using a customer feedback software tool that allows you to build surveys to gather, organize, and analyze feedback in one place, you can listen to the voice of customers and identify common issues. This approach can help you to maintain high customer retention rates, which can lead to increased revenue and growth during difficult times.
Opt for feedback software that offers:
- Building customer surveys effortlessly and allowing customization as per requirement
- Collecting feedback automatically at specific touchpoints
- Analyzing feedback data and generating reports that highlight trends and insights
- Integration with other business tools, such as CRM or marketing automation software
- Offers real-time alerts on negative feedback to close the feedback loop faster
- Real-time feedback collection by supporting multiple feedback channels such as email, website widgets, in-app pop-ups, or SMS
Invest in Flanker Brand Based on Customer Needs
You can also invest in creating a flanker brand to capture additional market share and revenue by offering a product or service that appeals to a different segment of customers. By introducing a flanker brand, you can diversify your offerings to weather any economic downturns.
For example, say you provide project management software, then you can introduce a new flanker brand that focuses on time tracking and invoicing. This new product could appeal to freelancers and small businesses with different needs than the company's existing customers.
What strategies can you adopt to understand customer needs?
- Stay agile and adaptable for product development, marketing, and customer service
- Be responsive to feedback from customers and update products regularly by incorporating feature request surveys.
- Leverage technology and invest in AI for predictive analytics, qualify leads, and support customers 24/7
- Optimize portfolio by eliminating low-performing SKUs
- Offer flexible pricing options through discounts or allow customers to pay only for what they need
2. Identify Areas of Product Improvement
Customers know your product best and are most likely to come up with new ideas for improving your product. In a declining economy, customer retention is essential, and customers will continue choosing your product if it satisfies their needs. Top product-led growth companies leverage their product to engage and expand opportunities with existing customers, acquiring new prospects, automating tasks, and continuously improving them by seeking customer feedback.
Strengthen Customer Relationship Through Product
Through customer feedback, you can identify areas where their product is falling short and make changes to address product issues. By actively soliciting customer feedback and demonstrating a commitment to improving the product, you can build stronger relationships with your customers and build customer loyalty which is crucial for maintaining revenue and profitability.
Some areas where you can concentrate on improving your product could be:
- Adding new features based on new feature requests
- On existing features: deliberate improvements (enhancing existing features that customers already love), frequency improvements (increasing usage frequency of a feature), and adoption improvements (enhancing a feature to encourage more users to adopt it)
- Making the product more compatible through integrations across software
- Security and data privacy to protect customers’ sensitive information
3. Understand Pricing Adjustments and Promotions
During a bad economy, your customers will be more likely to be price-sensitive and change their spending habits. A majority of customers might switch to less expensive alternatives even if they have been loyal to a brand in the past. In fact, during the 2008 recession, 18% of customers switched to lower-priced options and found them a better choice during the downturn.
“When times are good, pricing sins can be easily forgiven. But when the economy sours, a misguided pricing strategy can shrink profitability, warp customer relationships, and destroy a brand…” - How to Think About Pricing Strategies in a Downturn, Harvard Management Update, Vol. 7
Optimize Budget Expenses
When a crisis hits, you need to be strategic in your decision-making. While tightening budgets might be necessary to optimize and forecast cash flow, using cash app for instance, it's crucial to make feasible budget cuts that work in tandem with other measures taken to weather the storm.
For instance, if a product line is no longer profitable and gets discontinued, it's only logical to pause any marketing activities that support it and optimize expenditure.
“When difficult decisions must be made to determine which programs an organization should fund or cut, a key best practice is to prioritize and view bottom line performance through the lens of profitability” - Eric Best, CEO and Co-founder, SoundCommerce
Tips to experiment with pricing and promotion through customer feedback:
- Opt for new pricing strategies by bringing discounts, bundle offers, or subscriptions based on feedback
- Analyze customer feedback on competitors and monitor their pricing to remain competitive
- Create a flanker brand with lower-cost options for price-sensitive customers
- Understand customer inclinations to create targeted promotions that appeal to them
- Identify value-added service areas to differentiate yourself from competitors
4. Innovate to Gain Competitive Edge
According to Mckinsey, companies that invest in innovation outperform peers during the recession by 10% and 30% in post-crisis years. By collecting feedback and adapting to changes in customer preferences, you can stay ahead of competitors who may be slower to respond to changing market conditions.
For example, while the Covid pandemic caused economic harm to many industries, pharmaceutical and medical companies recognized an opportunity in the market and concentrated on innovating based on consumer demands. Similarly, in a bad economy, you can carry out customer satisfaction surveys, and based on data, you can invest in creating new products that are budget-friendly, as it could be a primary concern in an economic downturn.
Some simple steps that you can take to innovate can include:
- Collect customer feedback through surveys (in-app, website, emails, etc.)
- Identify trends and patterns by advanced segmenting users
- Ideate new products or refine existing ones based on customer feedback
- Prototype and test with a sample of customers to check viability and effectiveness
- Refine and finalize the design and perform iteration and testing if required
- Launch and monitor the performance of the product based on customer feedback
5. Reduce Churn & Retain Customers
Based on the Pareto principle, acquiring new customers is more expensive than retaining existing ones. In an economic slump, retaining customers can be an excellent opportunity to make revenue based on the customer loyalty built over time.
“Through the Great Recession, financial services companies who paid close attention to distressed customers and helped them maintain stability now have customers for life. Similarly, during the pandemic, companies who actively listened to customers and analyzed their feedback were able to quickly pivot and deliver improved digital experiences.” - Bill Staikos, Senior Vice President, Medallia
Customer feedback can help you reignite discussions with your team about improving customer experience initiatives that have been identified in the past but are yet to be put into action.
Ways to Reduce Churn include:
- Simplify the buying process and streamline the checkout processes
- Enhance loyalty program offerings through rewards, exclusive access, etc., and collaborate with partners
- Encourage customers to explore your product so that their information is cookied and personalized information can be shown
- Remove specific paywalls and extend free trial offers to encourage continued use of the product
Give the option to pause the subscription rather than completely delete it to save the onboarding hassle
Tips for Effective Feedback Collection in a Bad Economy
When the economy is declining, customer feedback can help you identify opportunities to thrive in the market. However, effectively performing feedback collection requires more than just asking customers to take the survey.
Here are some tips for effective feedback collection that can give you insights into customer preferences and perspectives to surge your business in an economic hardship:
1. Take Surveys at all Touchpoints
By taking surveys at every touchpoint to understand customer needs, you can enhance your products and services as per the need of the hour. Customer feedback surveys can be collected by using various channels such as:
- In-app where you can conveniently let your customers take the survey and increase response rates
- Website surveys where you can take real-time feedback to reach a larger audience and segment their responses
- SMS surveys where you can send the survey directly to your customer’s mobile, and they can conveniently answer
- Email surveys to reach different types of customers to gather more comprehensive data by using catchy subject lines and images
- Offline surveys for reaching out to targeted customers with limited internet accessibility
2. Leverage Customer Data
Through customer feedback, you can leverage the data to identify key customer segments and target surveys specifically to those groups. It can increase relevance and improve customer response rates. You can also send personalized content to customers and enhance the quality of feedback.
Use customer feedback data to:
- Recognize areas of improvement for the product and refine the product roadmap
- Reduce high friction elements and lower customer churn
- Discover brand advocates and get positive word of mouth
- Customize marketing and sales campaigns
3. Segment Customers to Enhance Revenue
Consider this a holy grail if you want to thrive in an economic downturn. Every customer is unique, and segmenting users to send them personalized messages or services increases the conversion rate over time.
In a bad economy, segmentation can help you in:
- Creating targeted marketing that is more likely to resonate with each segment and encourage them to make a purchase
- Adjusting pricing strategies to stay competitive and increase revenue
- Customize products as per value or affordability based on the need and budget of your customers
- Identifying opportunities for upselling and cross-selling without significant investments
4. Automate Follow-Ups to Save Time
By responding quickly to your customers, you can increase your chances of retaining customers and making conversions even when your team is unavailable. If you can reach out to customers faster and attend to their needs, you will leave a positive impact on your customers' minds.
Through automated follow-ups, you can
- Speed up the feedback process
- Improve response rates and capture customers' interest
- Save time and enhance customer experience
- Optimize follow-up campaigns through open and click-through rates, conversion rates, and customer feedback
Collecting feedback is crucial for your company, especially in a recessionary period, as many customers would consider switching to other brands or products that better meet their needs and preferences. In a bad economy, customers become more price-sensitive, and their priorities and behaviors may change as they try to cut costs.
By collecting customer feedback, you can better understand these changing needs and preferences and make necessary adjustments to pricing adjustments and promotions. This can help retain customers, reduce churn, and improve customer loyalty.
Moreover, collecting feedback can also help you identify areas for improvement and opportunities for cost savings, ultimately helping you remain competitive and successful during tough economic times. By taking surveys and leveraging customer data, you can make the most of customer feedback and make informed decisions for your business.
Sign up for a 7-day free trial with Zonka Feedback to listen and respond to customers' needs in tough economic times, as it is equipped with advanced features like automated workflows, user segmentation, and real-time analytics.